Why Security Standards Matter in NDAs
A confidentiality agreement is only as strong as the security practices that protect the information. By incorporating specific security standards into your NDA, you create legally enforceable obligations that go beyond simple "keep it secret" language. This is especially critical when sharing source code, credentials, or customer data.
The right security requirements depend on your industry, the type of data being shared, and your counterparty's capabilities. Below, we break down the major security frameworks and how to reference them in your NDAs.
Which Standards Apply to Your Situation?
Financial Services / Banks
If you're working with banks, insurance companies, or financial institutions
Healthcare / Medical Data
If you're handling protected health information (PHI) for US healthcare entities
Payment Processing
If you're handling credit card numbers or payment credentials
EU Data / European Users
If you're handling personal data of EU/EEA residents
SaaS / Enterprise Software
General enterprise software development without specific regulated data
SOC 2 Type II
Service Organization Control
When to Require
- Sharing with any enterprise SaaS vendor
- Contractors with ongoing system access
- Third parties handling customer data
- Cloud infrastructure providers
Key NDA Provisions
- Maintain SOC 2 Type II certification
- Provide annual audit reports upon request
- Notify of any audit findings that affect security
- Implement all five Trust Service Criteria
ISO 27001
Information Security Management
When to Require
- International or global partnerships
- Enterprise vendors outside the US
- Organizations in regulated industries
- Large-scale data processing operations
Key NDA Provisions
- Maintain ISO 27001 certification from accredited body
- Apply ISMS controls to all Confidential Information
- Conduct annual internal audits
- Document and remediate non-conformities
GDPR
General Data Protection Regulation
When to Require
- Processing personal data of EU/EEA residents
- Any subprocessor accessing EU personal data
- Cross-border data transfers from EU
- Joint controller arrangements
Key NDA Provisions
- Process data only as instructed by controller
- Implement appropriate technical measures
- Assist with data subject rights requests
- Delete or return data upon termination
HIPAA
Health Insurance Portability & Accountability
When to Require
- Healthcare providers sharing patient data
- Health tech vendors accessing PHI
- Insurance claims processors
- Any business associate handling PHI
Key NDA Provisions
- Execute a Business Associate Agreement (BAA)
- Implement administrative, physical, and technical safeguards
- Report breaches within 60 days
- Ensure subcontractor compliance
PCI-DSS
Payment Card Industry Data Security
When to Require
- Any access to cardholder data
- Payment processing integrations
- E-commerce platform development
- Point-of-sale system access
Key NDA Provisions
- Maintain PCI-DSS compliance at appropriate level
- Provide Attestation of Compliance (AOC)
- Never store CVV, PIN, or magnetic stripe data
- Use encryption for all cardholder data
Standards Comparison Matrix
| Requirement | SOC 2 | ISO 27001 | GDPR | HIPAA | PCI-DSS |
|---|---|---|---|---|---|
| Third-Party Audit Required | |||||
| Encryption at Rest Required | |||||
| Breach Notification Timeline | Varies | 72 hours | 72 hours | 60 days | Immediate |
| Data Deletion Requirements | |||||
| Access Logging Required | |||||
| Subcontractor Requirements | |||||
| Penalties for Non-Compliance | Contractual | Contractual | Up to 4% revenue | Up to $1.5M/year | $5K-$100K/month |
= Required | = Recommended but not mandated | Empty = Not applicable
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